The Effect of Instagram on Customer Relationship, Customer Equity, and Purchase Intention Towards Luxury Fashion Brands

As the usage of online shopping platforms becomes more important for today’s society, luxury fashion brands are prompting to adopt online selling as their distribution channels. Especially in adopting social media marketing on the Instagram platform. However, social media usage brings a dilemma and hesitation to luxury fashion brands because of the different characteristics between social media and the luxury fashion brand itself. Adding that, a lack of studies discusses how luxury fashion brands should use their Instagram to have more effective marketing strategies to manage their customer relationships and customer equity. In response to this situation, this research was conducted to assess the effect of Instagram on building customer relationships and customer equity, which, in return, stimulating purchase intention. A quantitative approach through the questionnaire-survey method was performed in this research, where this research uses descriptive statistics, MANOVA-SPSS, and PLS-SEM to analyze the data. As a result, this research can answer the dilemma of using social media which shows the positive contribution of social media marketing on customer relationships and customer equity, were in the end, creating purchase intention. These findings contribute to maximize the usage on Instagram and give recommendations on how to deliver luxury values to the market.